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Decyzje

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Year 2014-03-17 
Issue 19

Probability distortion in decisions under risk

Katarzyna Idzikowska
Akademia Leona Koźmińskiego

2014-03-17 (19) Decyzje

DOI 10.7206/DEC.1733-0092.4

Abstract

This paper presents the results of study on the probability distortion. The distortion is studied at two levels: (i) in the decision maker's perception (expressed as subjective judgements), and (ii) in the decision maker's choices (expressed in decision weights). The study examined how the two types of distortion – concerning perception and weights – depend on the way information on probability is presented. Two formats of probability information were distinguished: descriptive (expressed in numbers) and experience.

The results confirmed the hypothesis of lower perceptual distortion of objective probability when the information on payout distribution was presented using the experience-based format than when the information was given as a description. The hypothesis on the lower distortion of probability in decision weights with the experience probability format was not confirmed. An unexpected result was a lower risk seeking with the experience format. This effect seems to be a result of attributing lower weights than with the descriptive format. Furthermore, it appears that the probability distortion in decision weights at least partly results from the distortion in perception.

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APA style

Idzikowska, K. . (2013). Probability distortion in decisions under risk. Decyzje, (19), 75 97. https://doi.org/10.7206/DEC.1733-0092.4 (Original work published 2014-03-17)

MLA style

Idzikowska, K. . “Probability Distortion In Decisions Under Risk”. 2014-03-17. Decyzje, no. 19, 2013, p. 75 97.

Chicago style

Idzikowska, Katarzyna . “Probability Distortion In Decisions Under Risk”. Decyzje, Decyzje, no. 19 (2013): 75 97. doi:10.7206/DEC.1733-0092.4.